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BTC stablecoins are facing market adjustments and their market value has dropped by US$10 billion.
The stablecoin market has recently experienced the most significant contraction since the TerraUSD crash in 2022, with a sharp drop in market value by approximately US$10 billion. This decline is equivalent to a 3% contraction, but recent gains in this sector have been largely unaffected, demonstrating the continued resilience of the overall market.
What caused the decline?
Two major players-Tether (USDT) and USD Coin (USDC)-are the main drivers of this contraction. USDT supply fell from nearly $190 billion to $184 billion, while USDC supply fell to about $73 billion. Taken together, these two stablecoins form the cornerstone of liquidity on centralized and decentralized exchanges. Despite the significant decline in the value of the U.S. dollar, the total market value of stablecoins is still well above levels before the recent expansion phase, indicating that adoption rates in the cryptocurrency ecosystem continue to grow.
Impact on liquidity and trading activity
The current decline in the supply of stablecoins can be attributed to weakening market activity. This decline is in line with investor caution, reflected in falling trading volumes and reduced inflows of funds into cryptocurrency ETFs, particularly Bitcoin. However, trading volume of stablecoins on centralized exchanges rebounded, increasing by 10.8% to nearly US$981 billion, demonstrating its continued role in daily transactions.
In contrast, tokenized real-world assets showed strong growth, reaching a market value of US$30.1 billion in June. This trend, driven by the expansion of tokenized U.S. Treasuries and public stocks, highlights the growing interest in blockchain's potential in traditional finance. The USDC has been approved to operate as a federally regulated trust bank. The scale of tokenized treasury bonds products reaches approximately US$17 billion. Despite the decline in overall supply, stablecoin trading volumes on centralized exchanges are still growing.
With clear guidance from regulators, especially the United States, major stablecoin issuers have been granted new licenses and allowed deeper integration into the market. This change, coupled with the widespread use of tokenized assets, reflects the strong interest of institutional investors. Such regulatory developments may lay the foundation for the return of funds to stablecoins before the end of the year, although current market caution remains an important factor affecting industry dynamics.
